California has long had a reputation as America’s environmental trendsetter. Back in the 1960s, choking under the worst smog in the nation, it successfully fought automakers to include catalytic converters and other cleaner technology on cars sold in the state -- a victory that was eventually rolled out nationwide. More recently, in 2006, California passed A.B. 32, which mandated that the state revert back to 1990 levels of greenhouse gas emissions by the year 2020. The legislation garnered national attention for putting into effect the largest cap-and-trade system in the country; it also inspired similar legislation in other states.
Now California is making history again with its solar mandate, which also requires new buildings to have better insulation and ventilation and non-residential buildings to upgrade to energy-efficient lighting. The only question is whether the requirement -- like past initiatives -- will spur similar efforts in other states.
The short answer -- at least for now -- is no. “Even for energy-forward places, this may be too much,” says Jay Orfield, a senior policy analyst in the Climate & Clean Energy Program at the Natural Resources Defense Council. “Most places are wary about how [the mandate] will affect housing. So for now, states will be keeping a close eye on California.”
Indeed, one of the key criticisms of the new mandate is housing affordability. California has some of the highest housing costs in the nation, and the state energy commission has estimated that solar panels will add more than $10,000 in initial costs for single-family homes. “The additional $10,500 might not be quite as noticeable in San Francisco where the median list price is $1.2 million,” wrote Charles Hughes, a policy analyst at the Manhattan Institute, “but it would comprise a much larger share of the total home price in Fresno, where the median list price is $256,000.”
But the commission insists that solar arrays would pay for themselves in the long run in lower electricity bills. In a press release, the commission said that their research showed that for residential homeowners, based on a 30-year mortgage, “the standards will add about $40 to an average monthly payment, but save consumers $80 on monthly heating, cooling and lighting bills.”
Both are right, says Dirk Michels, a partner at Ballard Spahr LLP who specializes in the solar industry. “It increases the cost -- the upfront cost -- but it also stabilizes energy costs.”
Orfield agrees. “My guess is that over the short term you will see some abnormalities. You’ll see developers put houses on the market at a premium because they have solar now and they have to pass that expense along to consumers,” he says. “But at the same time, your house will be more valuable down the road and you’ll recoup the cost over time. It just needs to play out.”
While housing affordability questions might keep other states on the bench for now, Orfield and Michels agree that one component of the new requirement may have a more immediate effect: getting states to think about renewables and energy storage at the same time. Under the new building standards, homebuilders can reduce the number of solar panels they have to install by 25 percent if they integrate energy storage. The advantage is that storage will allow homes to store power for later when sunlight isn’t available.
That will almost certainly affect how states approach renewables going forward. “I think what this is doing is accelerating the conversation about how to incorporate more solar onto the grid,” says Orfield. “But it especially provides a road map in that states will think more about doing solar and storage together, being more responsible and proactive in planning for renewables.”
